Patrick from Cash Money Life makes a good observation in his blog today: Even though 2008 is over, you can still contribute to your 2008 IRA until tax day – April 15, 2009.
An IRA, or Individual Retirement Account, is a common retirement plan account that provides certain tax advantages for retirement savings in the United States. Contributions are often tax deductible, but withdrawals may or may not be, depending on the type of IRA.
Between January 1 and April 15, 2009, you can contribute to both your 2008 and 2009 IRAs. During this time, you will need to specify which tax year your are contributing to, but many people don’t know the overlap exists at all. So for those who thought they had missed their deadline, they may be in luck.
The maximum you can invest in a Traditional or Roth IRA for 2008 and 2009 is $5,000 if you are under age 50. Those who are age 50 and older are eligible for catch-up contributions and can contribute up to $6,000 in 2008 and 2009.
It is important to note that you can only contribute up to the maximum limit across all individual IRA accounts (self-employed retirement plans may have different rules). I am under 50 years old, so I would be able to contribute any combination of $5,000 between any IRAs I decide to open. For example – $2,500 in a Traditional and a $2,500 Roth IRA, or $3,000 in a Roth IRA + $2,000 in a Traditional IRA, etc. so long as it does not exceed $5,000.
If you are married, you can also open an IRA in his or her name and contribute to that as well to increase (double) your overall IRA.